CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 1 – Business Organization
These
financial statements represent the financial statements of National Waste Management Holdings, Inc. (“NWMH”) and it’s
wholly owned operating subsidiaries, Sand/Land of Florida Enterprises, Inc. (“Sand/Land”), Waste Recovery Enterprises,
LLC (“WRE”) and Gateway Rolloff Services, LP (“Gateway”). NWMH, Sand/Land, WRE and Gateway are collectively
referred to herein as the “Company”. The Company changed its name from Kopjaggers, Inc. to National Waste Management
Holdings, Inc. effective October 31, 2014.
On
June 16, 2014, pursuant to a share exchange agreement, NWMH merged with Sand/Land of Florida Enterprises, Inc. (“Sand/Land”),
a Florida corporation formed as a S-Corporation under the laws of the State of Florida on August 15, 1986, in which the existing
stockholders of Sand/Land exchanged all of their issued and outstanding shares of common stock for 9,490,000 shares of common
stock of NWMH (the “Reverse Merger”). After the consummation of the Reverse Merger, stockholders of Sand/Land owned
47.45% of NWMH outstanding common stock.
As
a result of the Reverse Merger, Sand/Land became a wholly owned subsidiary of NWMH. For accounting purposes, the Reverse Merger
was treated as a reverse acquisition with Sand/Land as the acquirer and NWMH as the acquired party. As a result, the business
and financial information included in this Quarterly Report on Form 10-Q is the business and financial information of Sand/Land.
WRE
and Gateway were related party acquisitions. They were acquired on October 15, 2015 and December 1, 2015, respectively. See Notes
9 and 10, Related Party Transactions and Acquisitions, respectively.
Sand/land
is a solid waste management company headquartered in Central Florida, currently operating a licensed Construction & Demolition
landfill. The Company’s primary operations are based near Tampa, Florida.
WRE
is a waste management company that offers trash collection services, roll-off services and a full service transfer station. The
Company also offers wood grinding, demolition, mulch and gravel services. The Company’s primary operations are based near
Binghamton, New York. The Company was founded in 1998 and principally serves the Northeastern U.S. industrial and residential
markets.
Gateway
offers commercial and residential dumpster service and roll-off boxes for construction and clean up projects specializing in the
removal of debris, garbage, waste, hauling construction and demolition debris, focused on servicing general contractors, new home
builders, reconstruction, renovation, landscaping and home improvement professionals. The Company’s primary operations are
based near Tampa, FL.
The
Consolidated Company is a full service solid waste management company with operations in Florida and New York, Headquartered near
Tampa, FL.
Basis
of Presentation
The
financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally
accepted in the United States of America (“GAAP”). The Consolidated financial statements include the operations of
Sand/Land, WRE and Gateway, together, NWMH.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the amounts reported in the financial statements. Actual results could differ from those estimates.
Fair
Value of Financial Instruments
For
certain financial instruments, including accounts receivable, accounts payable, accrued expenses, interest payable, advances payable
and notes payable, the carrying amounts approximate fair value due to their relatively short maturities.
The
Company adopted ASC 820-10, “Fair Value Measurements and Disclosures.” ASC 820-10 defines fair value, and establishes
a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value
measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify
as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination
of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy
are defined as follows:
|
●
|
Level
1 inputs to the valuation methodology are quoted prices for identical assets or liabilities
in active markets.
|
|
●
|
Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities
in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument.
|
|
●
|
Level
3 inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
|
The
Company did not identify any non-recurring assets and liabilities that are required to be presented in the balance sheets at fair
value in accordance with ASC 815.
In
February 2007, the FASB issued ASC 825-10 “Financial Instruments.” ASC 825-10 permits entities to choose to measure
many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option
has been elected are reported in earnings.
The
carrying amounts of cash and current liabilities approximate fair value due to the short maturity of these items. These fair value
estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect these estimates. The Company does not hold or issue financial
instruments for trading purposes, nor does it utilize derivative instruments in the management of foreign exchange, commodity
price, or interest rate market risks.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies (Continued)
Revenue
and Cost Recognition
The
Company applies paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes
revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all
of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the sales price is fixed or determinable,
(iii) collectability is reasonably assured and (iv) goods have been shipped and/or services rendered.
Cash
and Cash Equivalents
For
purposes of reporting cash flows, the Company considers cash and cash equivalents to be all highly liquid deposits with maturities
of three months or less. Cash equivalents are carried at cost, which approximates market value.
The
Company maintains its cash and cash equivalents at various financial institutions where they are insured by the Federal Deposit
Insurance Corporation (FDIC) up to $250,000. The balances of these accounts from time to time may exceed federally insured limits.
The Company has not experienced any losses in such accounts.
Accounts
Receivable, Bad Debts and Allowance for Doubtful Accounts
An
allowance for doubtful accounts is provided for as a percentage of trade accounts receivable based on historical loss experience.
As of December 31, 2015 and 2014, the allowance for doubtful accounts was approximately $20,000 and $112,000, respectively. Bad
debt expense recognized for the years ended December 31, 2015 and 2014 was $(32,682) and $0, respectively. The negative bad debt
expense balance at December 31, 2015 was due to the allowance being overstated in the prior period and requiring adjustment
Property,
Plant and Equipment
Property,
plant and equipment are recorded at cost less accumulated depreciation. Expenditures for major additions and improvements are
capitalized. As property and equipment are sold or retired, the applicable cost and accumulated depreciation are removed from
the accounts and any resulting gain or loss thereon is recognized as operating expenses.
Depreciation
is calculated using the straight-line method over the estimated useful lives or, in the case of leasehold improvements, the term
of the related lease, including renewal periods, if shorter. Estimated useful lives are as follows:
Transportation equipment
|
|
|
5 years
|
|
Office and machinery equipment
|
|
|
5 years
|
|
Roll off containers
|
|
|
5-7 years
|
|
Airspace
|
|
|
39.5 years
|
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies (Continued)
Property,
Plant and Equipment (Continued)
The
Company reviews property, plant and equipment and all amortizable intangible assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be recoverable. Recoverability is based on estimated
undiscounted cash flows. Measurement of the impairment loss, if any, is based on the difference between the carrying value and
fair value.
Impairment
of Long-Lived Assets and Amortizable Intangible Assets
The
Company follows ASC 360-10, “Property, Plant, and Equipment,” which established a “primary asset” approach
to determine the cash flow estimation period for a group of assets and liabilities that represents the unit of accounting for
a long-lived asset to be held and used. Long-lived assets to be held and used are reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. The carrying amount of a long-lived asset
is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition
of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.
Through December 31, 2015, the Company has not experienced impairment losses on its long-lived assets.
Goodwill
Goodwill
consists of the excess of cost over identifiable net tangible and intangible assets of company’s acquired. In accordance
with the Accounting Standards Codification (“ASC”) 350 “Intangibles-Goodwill and Other”, the carrying
amount of goodwill and intangible assets is to be reviewed at least annually for impairment, and losses in value, if any, will
be charged to operations in the period of impairment. Goodwill was determined to not be impaired as of December 31, 2015. The
test for impairment was done in accordance with guidance in Accounting Standards Update (ASU) 2011-8 for the year ended December
31, 2015. ASU 2011-8 permits an entity to evaluate qualitative factors to assess whether impairment is more likely than not to
have occurred.
The
Company acquired two related entities during 2015. As part of those acquisitions, the Company assigned $1,238,173 and $941,010
of Goodwill to the purchase prices of WRE and Gateway, for a total of $2,179,183 goodwill included in our balance sheet.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies (Continued)
Intangible
Assets
The
Company has certain intangible assets resulting from business combinations and acquisitions that are recorded at cost. Intangible
assets with finite lives are amortized on a straight-line basis over their respective estimated useful lives.
Intangible
assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount
of the asset may not be recoverable. If the estimated undiscounted future cash flows related to the asset are less than the carrying
value, the Company recognizes a loss equal to the difference between the carrying value and the estimated fair value, usually
determined by the estimated discounted future cash flows of the asset. See note 10, Acquisitions for details related to the purchase
price allocation of identified definite lived amortizable intangible assets, including customer lists, licenses, permits and trademarks.
The Company has a customer list that was bought from a related party in 2011, a website built in 2015 and engineering costs as
part of a 10 year permit renewal with the Department of Environmental Protection. See note 4, Intangible Assets.
Advertising
Costs
The
Company expenses all advertising costs as incurred. Consolidated advertising expenses for the years ended December 31, 2015 and
2014 was $18,175 and $4,774, respectively.
Income Taxes
The
Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The Company reviews the tax positions taken or expected to be taken on tax returns to
determine whether and to what extent a benefit can be recognized in our Consolidated Financial Statements. Refer to Note 11 to
the Consolidated Financial Statements for the amount of unrecognized tax benefits and other disclosures related to uncertain tax
positions. To the extent interest and penalties would be assessed by taxing authorities on any underpayment of income tax, such
amounts are accrued and classified as a component of income tax expense.
The
Company files income tax returns in the United States and Florida, which are subject to examination by the tax authorities in
these jurisdictions, generally for three years after the filing date.
Management
has evaluated tax positions in accordance with FASB ASC 740, Income Taxes, and has not identified any tax positions that require
disclosure.
As of December
31, 2015, the following tax years are subject to examination:
Jurisdiction
|
|
Open
Years for Filed Returns
|
Federal
|
|
December
31, 2012 – 2015
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies (Continued)
Environmental
Remediation Liability
The
Company accrues for losses associated with environmental remediation obligations when such losses are probable and reasonably
estimable. Accruals for estimated losses from environmental remediation obligations generally are recognized no later than completion
of the remedial feasibility study. Such accruals are adjusted as further information develops or circumstances change. Costs of
future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental
remediation costs from other parties are recorded as assets when their receipt is deemed probable.
Operating,
General and Administrative Expenses
Business
operating costs including expenses generated from administration and purchasing functions, are recorded in “Operating, general
and administrative expenses” in the Consolidated Statements of Income. Business operating costs include items such as wages,
benefits, utilities, repairs and maintenance, advertising costs and credits, rent, insurance, depreciation, leasehold amortization
and costs for outside provided services.
Stock
Issued to Non-Employees for Services Rendered
The
Company accounts for stock issued to non-employees in accordance with the provisions of FASB ASC 505-50 “Equity Based Payments
to Non-Employees.” FASB ASC 505-50 states that equity instruments that are issued in exchange for the receipt of goods or
services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued,
whichever is more reliably measurable. The measurement date occurs as of the earlier of (a) the date at which a performance commitment
is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments
is complete (that is, the vesting date).
Earnings
Per-Share
Earnings
per share are based on the weighted-average number of common shares outstanding at each reporting period.
Reclassifications
Certain
reclassifications have been made in prior year balances to conform to the current year presentation. Such reclassifications had
no effect on net income as previously reported.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies (Continued)
Current
Relevant Accounting Standards
In
April 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU")
2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360): Reporting Discontinued
Operations and Disclosures of Disposals of Components of an Entity. ASU 2014-08 amends guidance on reporting discontinued operations
only if the disposal of a component of an entity or group of components of an entity represents a strategic shift that has (or
will have) a major effect on an entity’s operations and financial results. It also allows companies to have significant
continuing involvement and continuing cash flows with the discontinued operations. Additional disclosures are also required for
discontinued operations and individually material disposal transactions that do not meet the definition of a discontinued operation.
The standard should be applied prospectively for all disposals of components of an entity and for all businesses that, on acquisition,
are classified as held for sale that occurred within annual periods beginning on or after December 15, 2014, including interim
periods within that reporting period. Adoption of the ASU did not have an impact on the Company’s 2015 Consolidated Financial
Statements.
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which amended the existing accounting
standards for revenue recognition. ASU 2014-09 establishes principles for recognizing revenue upon the transfer of promised goods
or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services.
The standard was initially effective for annual reporting periods beginning after December 15, 2016, including interim periods
within that reporting period. In August 2015, the FASB issued a one-year deferral of the effective date of this new guidance resulting
in it now being effective for the Company beginning in fiscal year 2018. Early adoption is not permitted. The amendments may be
applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date
of initial application. The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated
Financial Statements.
In
August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40)(Topic 718):
Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. ASU 2014-15 provides guidance related
to management’s responsibility to evaluate whether there is substantial doubt about the entity’s ability to continue
as a going concern and to provide related footnote disclosures. The new requirements are effective for the annual periods ending
after December 15, 2016, and for interim periods and annual periods thereafter. Early adoption is permitted. Adoption of the new
ASU will not have an impact on the Company’s Consolidated Financial Statements.
In
February 2015, the FASB issued ASU No. 2015-02, "Consolidations (Topic 810): Amendments to the Consolidation Analysis"
("ASU 2015-02"), which amends current consolidation guidance including changes to both the variable and voting interest
models used by companies to evaluate whether an entity should be consolidated. The requirements from ASU 2015-02 are effective
for interim and annual periods beginning after December 15, 2015, and early adoption is permitted. The Company is currently evaluating
the impact of this new standard on its consolidated financial statements and related disclosures.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
2 – Significant Accounting Policies (Continued)
Current
Relevant Accounting Standards (Continued)
In
May 2015, the FASB issued ASU No. 2015-09, "Revenue from Contracts with Customers" ("ASU 2015-09"), which
establishes a comprehensive new revenue recognition model designed to depict the transfer of goods or services to a customer in
an amount that reflects the consideration the entity expects to be entitled to receive in exchange for those goods or services
and requires significantly enhanced revenue disclosures. ASU 2015-09 will replace most existing revenue recognition guidance in
GAAP when it becomes effective. The standard is effective for interim and annual periods beginning after December 15, 2016 and
permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The Company
is currently evaluating the impact of this new standard on its consolidated financial statements and related disclosures.
In
September 2015, the FASB issued ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period
Adjustments. ASU 2015-16 requires that any effect on earnings due to depreciation, amortization or other income effects, due to
a change to the provisional amounts be recorded in the current period’s financial statements as if the accounting had been
completed at the acquisition date. The portion of the amount recorded in the current-period earnings, which would have been recorded
in the previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date,
must be presented separately on the face of the income statement or disclosed in the notes to the financial statements by line
item. The amendment is effective for the fiscal year beginning after December 15, 2015. The amendments are to be applied prospectively
to any adjustments occurring after the effective date. Adoption of this ASU is not expected to have a material impact on the Company’s
Consolidated Financial Statements.
In
November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. ASU 2015-17
simplifies the presentation of deferred income taxes and requires that deferred tax liabilities and assets be classified as noncurrent
in a classified statement of financial position. The Company adopted ASU 2015-17 for the fiscal year ended December 31, 2015 and
applied it retrospectively.
In
February 2016, the FASB issued ASU 2016-02 Leases (Topic 842). ASU 2016-02 requires lessees to recognize assets and liabilities
for the rights and obligations created by their leases with lease terms more than 12 months. Current guidance only requires capital
leases to be recognized on the balance sheet. However, the ASU 2016-02 now requires that both capital and operating leases be
recognized on the balance sheet. The effect on cash flows will strictly depend on whether the lease is classified as an operating
lease or capital lease. The ASU 2016-02 will require disclosures to aid investors and other financial statement users to better
understand the amount, timing and uncertainty of the cash flows arising from leases. These disclosures are to include qualitative
and quantitative information about the amounts recorded in the financial statements. This update remains unchanged for lessors.
However, new guidance contains targeted improvements to align, where necessary, the lessor’s accounting with the lessee’s
accounting standards. ASU 2016-02 will become effective for annual periods beginning after December 15, 2018 and for interim periods
within those fiscal years. The Company is currently in the process of evaluating the impact of adoption of the ASU on its Consolidated
Financial Statements.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
3 – Property, Plant and Equipment
Property,
plant and equipment and related accumulated depreciation consist of the following at December 31, 2015 and December 31, 2014:
|
|
2015
|
|
|
2014
|
|
Machinery and equipment
|
|
$
|
3,209,228
|
|
|
$
|
1,914,696
|
|
Transportation equipment
|
|
|
2,119,472
|
|
|
|
561,240
|
|
Containers
|
|
|
942,400
|
|
|
|
-
|
|
Airspace
|
|
|
865,076
|
|
|
|
865,076
|
|
Buildings
|
|
|
493,225
|
|
|
|
-
|
|
Improvements
|
|
|
306,372
|
|
|
|
306,372
|
|
Land
|
|
|
225,000
|
|
|
|
-
|
|
Leased equipment
|
|
|
179,620
|
|
|
|
179,620
|
|
Land Fill Area
|
|
|
72,098
|
|
|
|
72,098
|
|
Office furniture and equipment
|
|
|
2,117
|
|
|
|
2,117
|
|
Total Property, plant and equipment
|
|
|
8,450,689
|
|
|
|
3,901,219
|
|
Less: accumulated depreciation
|
|
|
(3,409,409
|
)
|
|
|
(3,156,814
|
)
|
Property, plant and equipment, net
|
|
$
|
5,041,280
|
|
|
$
|
744,405
|
|
Depreciation
expense for the year ended December 31, 2015 and 2014 was $251,008 and $104,086, respectively.
Note
4
–
Amortizable Intangible
Assets
Intangible
assets consist of the following as of December 31, 2015 and December 31, 2014:
|
|
|
|
|
|
|
|
Amortization
|
|
|
2015
|
|
|
2014
|
|
|
Period
|
Customer list
|
|
$
|
1,413,872
|
|
|
$
|
90,813
|
|
|
5 years
|
Website costs
|
|
|
7,954
|
|
|
|
-
|
|
|
3 years
|
Licenses and permits
|
|
|
66,318
|
|
|
|
-
|
|
|
10 years
|
Less accumulated amortization
|
|
|
(74,791
|
)
|
|
|
(54,488
|
)
|
|
|
Intangible assets, net
|
|
$
|
1,413,353
|
|
|
$
|
36,325
|
|
|
|
Year Ending
|
|
|
|
2016
|
|
$
|
290,391
|
|
2017
|
|
|
272,228
|
|
2018
|
|
|
270,903
|
|
2019
|
|
|
269,577
|
|
2020
|
|
|
267,945
|
|
Thereafter
|
|
|
42,309
|
|
|
|
$
|
1,413,353
|
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
4 – Amortizable Intangible Assets (Continued)
Amortization
expense for the years ended December 31, 2015 and 2014 was $14,692 and $14,692, respectively.
Note 5 –
Commitments and Contingencies
General
During
the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation,
it evaluates the merits of the case in accordance with FASB ASC 450, Contingencies. The Company evaluates its exposure to the
matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines than an
unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. Certain insurance policies
held by the Company may reduce the cash outflows with respect to an adverse outcome of certain of these litigation matters.
Landfill
Related Environmental Remediation
The
Company currently operates a fully licensed landfill under approval by the Florida Department of Environmental Protection. As
such the company has set up a reserve allowance of $424,596 against estimated future closing cost. As of December 31, 2013 the
Florida Department of Environmental Protection has approved the secured letter of credit cash reserve of $324,950 set aside by
the Company at December 31, 2015 and December 31, 2014, respectively, in order to be in compliance with the financial assurance
requirements for long term care cost of the facility. It is reasonably possible that the recorded estimate of the obligation may
change in the near term.
Concentrations
of Revenues and Receivables
As
discussed in note 8, Related Party Transactions, during the years ended December 31, 2015 and 2014, approximately 20% and 31%
of the Company’s revenues were generated from a related party, respectively and approximately 16% and 79% of net accounts
receivable were due from related parties as of December 31, 2015 and 2014, respectively.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note
6 – Long-Term Debt
During
2015, the Company acquired WRE and the related debt outstanding as of the acquisition date. See note 10, Acquisitions, for a breakdown
of the purchase price allocation and total acquired debt, most of which relates to equipment financing on acquired equipment.
Following is a breakdown of non-related party long
term debt:
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Notes
payable to various banks, to finance various equipment purchases, payable in monthly installments between $646
and $10,107, with interest rates ranging from 2.39% to 9.63% maturing from December 30, 2015 through
December 28, 2020
|
|
$
|
604,005
|
|
|
$
|
-
|
|
Less
current portion of long-term debt:
|
|
|
(184,932
|
)
|
|
|
-
|
|
Long-term
debt, net of current portion
|
|
$
|
419,073
|
|
|
$
|
-
|
|
The aggregate annual maturities of non-related
party long-term debt are as follows:
2015
|
|
$
|
184,932
|
|
2016
|
|
|
141,399
|
|
2017
|
|
|
126,203
|
|
2018
|
|
|
127,899
|
|
2019
|
|
|
23,572
|
|
Total
|
|
$
|
604,005
|
|
Related Party Shareholder Loan
The Company has a note due the largest shareholder
of the Company. This note is unsecured, matures on December 31, 2016 and carries a 1% interest rate. The balance of the note as
of December 31, 2015 and 2014 was $504,547 and $756,337 respectively. During 2015, the Company paid down the Shareholder note
by approximately $250,000. During the years ended December 31, 2015 and 2014, the Company incurred related party interest expense
of $6,304 and $8,472. Total related party accrued interest related to this note as of December 31, 2015 and 2014 was $28,612 and$22,308,
respectively.
On October 15, 2015, the Company acquired a related
entity that was 50% owned by the largest shareholder of the Company. As part of that acquisition, the Company acquired a shareholder
note owed to the same majority shareholder of the Company. The balance of the note, including accrued interest on the acquisition
date was $1,512,753.
The combined balances of these related party notes
at December 31, 2015 were $2,017,301. Subsequent to year end, the Board and the Shareholder mutually agreed to convert $2,000,000
of the Notes balance to 10% cumulative preferred stock; these notes have been included in long-term liabilities due to the conversion
subsequent to year end. The remaining balance of the related party note after conversion was approximately $13,000.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 7 – Capital Leases
During 2014, the Company purchased equipment under
a capital lease obligation. The lease is payable in 60 monthly payments of $3,750, beginning December 20, 2014, maturing December
20, 2019. The capital lease is collateralized by the equipment purchased. The capital lease is personally guaranteed by the Chairman
and CEO of the Company.
Future minimum lease payments under the lease as of
December 31, 2015 are as follows:
2016
|
|
$
|
25,131
|
|
2017
|
|
|
29,753
|
|
2018
|
|
|
35,224
|
|
2019
|
|
|
37,952
|
|
Total capital lease obligation
|
|
$
|
128,060
|
|
The following is a summary of leased assets included
in machinery and equipment as of December 31, :
|
|
2015
|
|
|
2014
|
|
Leased Equipment
|
|
$
|
179,620
|
|
|
$
|
179,620
|
|
Less accumulated depreciation
|
|
|
(35,924
|
)
|
|
|
-
|
|
Net leased assets
|
|
$
|
143,696
|
|
|
$
|
179,620
|
|
Note 8 – Related Party Transactions
Related Party Sales and Accounts Receivable
The Company generates a significant portion of their
revenue from a related entity Transfer Station, owned by the majority shareholder of the Company. This related entity uses the
Company’s landfill (Sandland) as its primary source of disposal for trash, debris and waste and collected. Sandland also
trucks the disposal costs from the Company’s site, either directly or through a third party and bills the Company accordingly
for trucking services. Total revenue generated from the related entity during the years ended December 31, 2015 and 2014 for disposal
costs were $674,320 and $523,250 or 27% and 31% of total consolidated revenue, respectively. Total revenue generated from the
related entity during the years ended December 31, 2015 and 2014 for trucking services were $216,222 and $144,834, or 9% and 9%
of consolidated revenue, respectively. Total revenue generated from the related entity during the years ended December 31, 2015
and 2014 was $890,542 and $668,084, or 36% and 40% of consolidated revenue, respectively. Total related party accounts receivable
as of December 31, 2015 and 2014 related to these sales were approximately $91,000 and $75,000, or 16% and 71% of total net accounts
receivable, respectively.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 8 – Related Party Transactions (Continued)
Related Party Sales and Accounts Receivable (Continued)
On December 1, 2015, the Company acquired Gateway,
a related entity that was previously owned 50% by the largest shareholder of the Company. See note 10, Acquisitions for details.
Gateway disposes a large portion of their construction and debris collected in the related entities transfer station. Total expenses
incurred from the related entity during the years by the Consolidated entity during the years ended December 31, 2015 and 2014
were $56,331 and $0, respectively. Total related party accounts payable of the consolidated entity as of December 31, 2015 and
2014 related to these expenses were approximately $17,000 and $0, respectively.
Related Party Shareholder Loan
The Company has a note due the largest shareholder
of the Company. This note is unsecured, matures on December 31, 2016 and carries a 1% interest rate. The balance of the note as
of December 31, 2015 and 2014 was $504,547 and $756,337 respectively. During 2015, the Company paid down the Shareholder note
by approximately $250,000. During the years ended December 31, 2015 and 2014, the Company incurred related party interest expense
of $6,304 and $8,472. Total related party accrued interest related to this note as of December 31, 2015 and 2014 was $28,612 and$22,308,
respectively.
On October 15, 2015, the Company acquired a related
entity that was 50% owned by the largest shareholder of the Company. As part of that acquisition, the Company acquired a shareholder
note owed to the same majority shareholder of the Company. The balance of the note, including accrued interest on the acquisition
date was $1,512,753.
The combined balances of these related party notes
at December 31, 2015 were $2,017,301. Subsequent to year end, the Board and the Shareholder mutually agreed to convert $2,000,000
of the Notes balance to 10% cumulative preferred stock; these notes have been included in long-term liabilities due to the conversion
subsequent to year end. The remaining balance of the related party note after conversion was approximately $13,000.
Expenses Paid on Behalf of the Company by a Related
Party
Throughout the year ended December 31, 2015, Strategic
Capital Markets (“Strategic”), a related party, paid for expenditures of the Company as well as deposits on a landfill
acquisition on behalf of the Company. These expenditures primarily related to professional fees incurred for compliance related
to being a public company as well as marketing the Company’s investment strategy. Total expenses incurred for these services
were $203,607. Total deposits on the landfill (see note 10) paid by Strategic totaled $300,000 through December 31, 2015. Strategic
also incurred costs to build the Company’s investor relations website of $4,704during the fiscal year ended December 31,
2015. Strategic paid the cash portion of the acquisition of Gateway Rolloff Services, LP on December 1, 2015, totaling $450,000.
Total cash outlays by Strategic were $958,311 during the year ended December 31, 2015. As of December 31, 2015, $365,482 was settled
for 365,482 shares of the Company’s restricted common stock ($1 per share conversion). The remaining $592,829 is included
in the due from related party account. Subsequent to year end, this amount was settled for 592,829 shares of the Company’s
restricted common stock ($1 per share conversion).
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 8 – Related Party Transactions (Continued)
Related Party Acquisitions
On October 15, 2015 and December 1, 2015, the Company
closed on the Acquisition of Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP, respectively. Each of these acquired
entities were owned 50% by the majority shareholder of the Company prior to the acquisitions. In each acquisition, a second owner
owned 50% of the each acquired entity.
Waste Recovery Enterprises, LLC (“WRE”),
was acquired for a $250,000 owner financed note that was paid in January of 2016 and 2,750,000 shares of the Company’s restricted
common stock. Gateway Rolloff Services, LP (“Gateway”) was acquired for $450,000 in cash and a total of 2,400,000
shares of the Company’s restricted common stock. The majority shareholder of the Company received no cash or notes; he received
1,500,000 and 1,650,000 shares of the Company’s restricted common stock. The 3,150,000 shares of the Company’s restricted
common stock were not issued as of December 31, 2015, and thus have been presented in the balance sheet as common stock subscribed
in the equity section of the balance sheet. The shares were valued at $1 per share, equivalent with the settlement with Strategic
as described above in the related party note section describing the expenses paid on behalf of the Company.
See note 10, Acquisitions for further information
related to the acquisitions and the purchase price allocation.
Note 9 – Stockholders’ Deficit
Issuances of Restricted Common Stock for Services
On March 23, 2015 the Company issued 100,000 shares
of restricted common stock for services related to Corporate Governance. The common shares were valued based on the fair value
of the services provided rather than the common stock issued because it was determined by management that the fair value of the
services rendered was more readily available than the fair value of the restricted common stock issued. The total value assigned
to these services was $6,100; $3,500 was paid in cash and $2,500 was recognized related to the issuance of the restricted common
stock. The Company receiving the shares paid the Company $100 for the shares as part of the consulting agreement. On October 2,
2015, the Company entered into a second agreement with this consultant, this time for the issuance of 200,000 in exchange for
governance services and NASDAQ consulting related to a potential up list to that Exchange. The services provided included a search
for qualified independent board members, independency verifications of these potential members, drafting of a compensation package
for Board of Director members, NASDAQ application for a potential up list (including related consulting on an up list), ongoing
acquisition identification and due diligence, drafting of an insider trading policy, ongoing governance consulting through December
31, 2015 and succession planning for the Company as a whole. The shares were valued at the estimated fair value of the services
provided, which was estimated as $40,000 based on the Consultants estimate of fair value of the services. The per share value
(restricted common) for these services recognized in our financial statements based on the fair value of services performed, or
$0.20 per share.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 9 – Stockholders’ Deficit (Continued)
Issuances of Restricted Common Stock for Services
(Continued)
The Company agreed to issue 100,000 shares of common
stock to an attorney for services provided as part of the original reverse merger filed by the Company. The shares were committed
prior to the Company being a public entity and thus had no trading value or history. The shares were valued at $3,600 based on
the fair value of services provided rather than the common stock issued because it was determined by management that the fair
value of the services rendered were more readily available than the fair value of the restricted common stock issued.
During December of 2015, the Company issued 75,000
shares of restricted common stock to consultants for public relations and investor relation services. The shares were valued at
the estimated fair value of the services performed, $15,000 or $0.20 per share.
Shares issued to Strategic for Expenses, Deposits
and Acquisitions paid for on Behalf of the Company
As discussed in Note 8 above, a related entity incurred
costs and paid landfill acquisition deposits and paid the cash portion of an acquisition on behalf of the Company. Total restricted
common shares issued prior to December 31, 2015 for settlement of these costs totaled 365,482 (settled for $1 per share). Subsequent
to year end, an additional 592,829 shares of the Company’s restricted common stock were settled for these expenses, deposits
and acquisition costs at $1 per restricted common share.
Shares issued for Acquisitions
On October 15, 2015 and December 1, 2015, the Company
closed on the Acquisition of Waste Recovery Enterprises, LLC and Gateway Rolloff Services, LP, respectively. Each of these acquired
entities were owned 50% by the majority shareholder of the Company prior to the acquisitions. In each acquisition, a second owner
owned 50% of the each acquired entity.
A total of 2,400,000 shares of the Company’s
restricted common stock were issued for these two acquisitions. The majority shareholder of the Company received no cash or notes;
instead, he received 1,500,000 and 1,650,000 shares of the Company’s restricted common stock for the sale of WRE and Gateway,
respectively. The total 3,150,000 shares of the Company’s restricted common stock were not issued to the majority shareholder
until after December 31, 2015, and thus have been presented as common stock subscribed in the equity section of the balance sheet.
The shares were valued at $1 per share, equivalent with the settlement with Strategic as described above in the related party
note section describing the expenses paid on behalf of the Company.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 9 – Stockholders’ Deficit (Continued)
Preferred Stock
During May 2015, the Company amended the Articles
of Incorporation to authorize 10,000,000 shares of the Company’s Series A preferred stock, no par value per share. On June
17, 2015, the Company issued one share of Series A Preferred Stock, no par value, to the Company’s Chairman of the Board
(the “Chairman”). As a holder of outstanding shares of Series A Preferred Stock, the Chairman is entitled to voting
power equivalent to the number of votes equal to the total number of Company’ common stock outstanding as of the record
date for the determination of stockholders entitled to vote at each meeting of stockholders of the Company and entitled to vote
on all matters submitted or required to be submitted to a vote of the stockholders of the Company.
Private Placement Shares
The Company raised $20,000 through sales of 40,000
shares of the Company’s restricted common at $0.50 per share through a Private Placement Memorandum. Total proceeds for
these sales was $20,000.
Note 10 – Acquisitions
Related Party Acquisitions
Waste Recovery Enterprises, LLC
On October 15, 2015, the Company acquired Waste Recovery
Enterprises, LLC (“WRE”), an entity that was 50% owned by the Majority shareholder of the Company. WRE offers residential
trash pickup, commercial or residential dumpster service and roll-off boxes for construction and clean up projects. The Company
has a transfer station that accepts construction and demolition debris, household trash, furniture and appliances. The Company
also offers wood grinding, demolition, mulch and gravel services. The Company’s primary operations are based near Binghamton,
New York.
See the table below summarizing the purchase price
paid to the related party owner and the 2
nd
, non-related party entity:
Party
|
|
Cash
|
|
|
Owner Financed Short Term Note
|
|
|
Restricted Common Shares
|
|
|
Value Assigned to Shares ($1/share)
|
|
|
Total Purchase Price
|
|
Majority Shareholder – 50% owner
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
1,500,000
|
|
|
$
|
1,500,000
|
|
|
$
|
1,500,000
|
|
Non-related entity – 50% owner
|
|
|
-
|
|
|
|
250,000
|
|
|
|
1,250,000
|
|
|
|
1,250,000
|
|
|
|
1,500,000
|
|
Total
|
|
$
|
-
|
|
|
$
|
250,000
|
|
|
|
2,750,000
|
|
|
$
|
2,750,000
|
|
|
$
|
3,000,000
|
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 10 – Acquisitions (Continued)
Related Party Acquisitions (Continued)
Waste Recovery Enterprises, LLC (Continued)
Operations subsequent to October 15, 2015 are included
in the accompanying consolidated financial statements. The acquisition has been accounted for using the purchase method of accounting.
The purchase price of $3,000,000 was allocated as follows:
Assets
|
|
|
|
Cash
|
|
$
|
29,625
|
|
Accounts receivable
|
|
|
32,706
|
|
Other current assets
|
|
|
54,598
|
|
Due from related party
|
|
|
30,097
|
|
Total current assets
|
|
|
162,882
|
|
Property and Equipment
|
|
|
|
|
Transportation equipment
|
|
|
1,116,682
|
|
Machinery and Equipment
|
|
|
756,800
|
|
Buildings
|
|
|
493,225
|
|
Land
|
|
|
225,000
|
|
Containers
|
|
|
160,400
|
|
Leasehold improvements
|
|
|
17,154
|
|
Furniture and fixtures
|
|
|
2,069
|
|
Total property and equipment
|
|
|
2,771,330
|
|
Goodwill and intangible assets
|
|
|
|
|
Customer relationships
|
|
|
639,433
|
|
Licenses and permits
|
|
|
50,000
|
|
Goodwill
|
|
|
1,238,173
|
|
Total goodwill and intangible assets
|
|
|
1,927,607
|
|
Total assets
|
|
|
4,861,819
|
|
Liabilities
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
(64,179
|
)
|
Due to related entity
|
|
|
(30,000
|
)
|
Total current liabilities
|
|
|
(94,179
|
)
|
Related party debt
|
|
|
(1,512,754
|
)
|
Long term debt
|
|
|
(254,886
|
)
|
Total liabilities
|
|
|
1,861,819
|
|
Total consideration for acquisition
|
|
$
|
3,000,000
|
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 10 – Acquisitions (Continued)
Related Party Acquisitions (Continued)
Gateway Rolloff Services, LP
On December 1, 2015, the Company acquired Gateway
Rolloff Services, LP (“Gateway”), an entity that was 50% owned by the Majority shareholder of the Company. Gateway
offers commercial and residential dumpster service and roll-off boxes for construction and clean up projects specializing in the
removal of debris, garbage, waste, hauling construction and demolition debris, focused on servicing general contractors, new home
builders, reconstruction, renovation, landscaping and home improvement professionals. The Company’s primary operations are
based near Tampa, FL.
See the table below summarizing the purchase price
paid to the related party owner and the 2
nd
, non-related party entity.
Party
|
|
Cash
|
|
|
Cash Paid on Behalf of Company By Related Entity
|
|
|
Restricted Common Shares
|
|
|
Value Assigned to Shares ($1/share)
|
|
|
Total Purchase Price
|
|
Majority Shareholder –
50% owner
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
1,650,000
|
|
|
$
|
1,650,000
|
|
|
$
|
1,650,000
|
|
Non-related entity
- 50% owner
|
|
|
-
|
|
|
$
|
450,000
|
|
|
|
750,000
|
|
|
|
1,250,000
|
|
|
|
1,500,000
|
|
Total
|
|
$
|
-
|
|
|
$
|
450,000
|
|
|
|
2,400,000
|
|
|
$
|
2,750,000
|
|
|
$
|
3,150,000
|
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 10 – Acquisitions (Continued)
Related Party Acquisitions (Continued)
Gateway Rolloff Services, LP (Continued)
Operations subsequent to November 30, 2015 are included
in the accompanying consolidated financial statements. The acquisition has been accounted for using the purchase method of accounting.
The purchase price of $3,150,000 was allocated as follows:
Assets
|
|
|
|
Cash
|
|
$
|
24,912
|
|
Accounts receivable
|
|
|
238,753
|
|
Total current assets
|
|
|
263,665
|
|
Property and Equipment
|
|
|
|
|
Transportation equipment
|
|
|
417,350
|
|
Containers
|
|
|
782,000
|
|
Total property and equipment
|
|
|
1,199,350
|
|
Goodwill and intangible assets
|
|
|
|
|
Customer relationships
|
|
|
683,626
|
|
Goodwill
|
|
|
941,010
|
|
Total goodwill and intangible assets
|
|
|
1,624,636
|
|
Total assets
|
|
|
3,087,651
|
|
Liabilities
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
(111,651
|
)
|
Due to related party
|
|
|
(26,000
|
)
|
Total current liabilities
|
|
|
(137,651
|
)
|
Total consideration for acquisition
|
|
$
|
2,950,000
|
|
The Majority shareholder received
a total of 3,150,000 shares of the Company’s restricted common stock. The shares were note issued as of December 31, 2015,
so they are included on the balance sheet as common stock subscribed. They were issued subsequent to year end.
The $450,000 paid in cash by
a related entity of the Company for the acquisition of Gateway was settled in restricted common stock subsequent to year end,
at $1 per share, for a total of 450,000 shares of the Company’s restricted common stock.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 10 – Acquisitions (Continued)
Landfill Acquisition – Unrelated Entity
On January 25, 2015, Sand/Land of Florida Enterprises,
Inc., a Florida corporation and a wholly-owned subsidiary of National Waste Management Holdings, Inc. (the “Company”),
entered into a commercial property purchase agreement (the “Agreement”) with Nova Resources, LLC (“Nova”),
a Florida limited liability company, to acquire a certain commercial and industrial construction and demolition landfill (the
“Transaction”) located at 3890 Grover Cleveland, County of Citrus, Homosassa, Florida 34465 (the “Property”)
for $2,500,000, on an “as is” basis. The Property services regions in and around Citrus County, Florida. The Property
is approximately eighty (80) acres and is permitted by the State of Florida Department of Environmental Protection as a “Construction
and Demolition Landfill”.
Pursuant to the terms of the Agreement, the Company
agreed to pay an initial non-refundable down payment of $25,000 on January 25, 2015 (the “Initial Payment Day”) and
may pay up to five additional non-refundable monthly payments of $25,000 due on the 15th day of each month (the “Extension
Payment”) following the Initial Payment Day to extend the closing date for an additional thirty (30) days. Each extension
payment shall be credited towards the total amount payable to Nova, with any remaining balance due no later than thirty (30) days
after the fifth extension payment. The Agreement may be terminated at the election of either party in the event that the transaction
does not close.
Nova agreed to certain non-compete provision for a
period of five (5) years from the closing date. Nova also agreed to provide, at the closing date, certain completed permit applications.
The Transaction is not subject to any realty commission
and has not closed as of December 31, 2015 or the date of this filing. The Company has a third party making the deposit payments
as discussed in Note 8 and Note 9, Related Party Transactions and Stockholders’ Deficit, respectively. As of December 31,
2015, the third party had made 12 payments of $25,000, totaling $300,000. This agreement was extended for an additional six months
through February 26
th
, 2016. The Company has written off these non-cash deposits due to the Company not closing on
the landfill by February 26, 2016. The expense was included in other expenses as a one time write off.
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 11 – Income Taxes
For the years ended December 31 2015 and 2014, the
Company recognized income tax expense (benefit) of $(32,150) and $80,951, respectively.
Income tax provisions for the years ended December
31,:
|
|
2015
|
|
|
2014
|
|
Current tax expense
|
|
|
|
|
|
|
Federal
|
|
$
|
-
|
|
|
$
|
29,895
|
|
State
|
|
|
-
|
|
|
|
2,347
|
|
|
|
|
|
|
|
|
32,242
|
|
Deferred tax expense (benefit)
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(32,150
|
)
|
|
|
45,163
|
|
State
|
|
|
-
|
|
|
|
3,546
|
|
|
|
|
(32,150
|
)
|
|
|
48,709
|
|
Total
|
|
$
|
(32,150
|
)
|
|
$
|
80,951
|
|
The reconciliations of the results of applying the
Company's effective statutory federal income tax rate of 34% for the years ended December 31, 2015 and 2014 to the Company's income
before taxes and the Company's provision for income taxes are as follows:
|
|
2015
|
|
|
2014
|
|
Federal income taxes
|
|
|
34.00
|
%
|
|
|
34.00
|
%
|
State income taxes
|
|
|
3.63
|
%
|
|
|
3.63
|
%
|
Effective tax rate
|
|
|
37.63
|
%
|
|
|
37.63
|
%
|
The components of the deferred tax assets, net of deferred tax liabilities
for each period are:
|
|
2015
|
|
|
2014
|
|
Property and equipment
|
|
$
|
21,512
|
|
|
$
|
48,709
|
|
Expenses paid by related party, not settled as of
year end
|
|
|
(53,662
|
)
|
|
|
-
|
|
Total Long term deferred tax liabilities
|
|
$
|
(32,150
|
)
|
|
$
|
48,709
|
|
NATIONAL
WASTE MANAGEMENT HOLDINGS, INC.
CONSOLIDATED
NOTES TO THE FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2015 AND 2014
Note 12 – Subsequent Events
Subsequent to December 31, 2015, the Company cancelled
an acquisition and forfeited the non-refundable deposits that had been paid on behalf of the Company by a related entity. Total
non cash loss from this write off was included in our other income and expenses as a one time charge to the Company’s operations.
Subsequent to year end, the Company issued 592,829
shares of restricted common stock in settlement for expenses paid for on behalf of the Company. Total costs incurred by the related
entity included $450,000 for the acquisition of Gateway (see Note 10, Acquisitions), $75,000 for funding the deposits for the
landfill acquisition that were written off subsequent to year end and $67,829 for professional fees paid for on behalf of the
Company. The shares settled a total of $592,829 and are included in liabilities on the Company’s balance sheet at December
31, 2015.
Subsequent to December 31, 2015, the Company entered
into an agreement to settle the Company’s consolidated related party note due the majority shareholder of the Company. The
consolidated balances of these related party notes at December 31, 2015 were $2,017,301. Subsequent to year end, the Company’s
Board of Directors and Majority Shareholder (holder of the Note) mutually agreed to convert $2,000,000 of the Notes balance to
10% cumulative preferred stock; these notes have been included in long-term liabilities due to the conversion subsequent to year
end. The remaining balance of the related party note after conversion was approximately $13,000.